RNS Number:8422K
European Telecom PLC
28 September 2001
PART 2
GROUP PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2001
Continuing operations 2001 2000
ongoing acquisition Total Total
Notes #000 #000 #000 #000
TURNOVER
Turnover: group and share of JVs
turnover 251,403 65,178 316,581 233,913
Less: share of JVs turnover (5,577) - (5,577) (4,186)
------ ------ -------- -------
GROUP TURNOVER 1 245,826 65,178 311,004 229,727
Cost of sales (227,526) (61,020) (288,546) (202,043)
-------- ------- -------- -------
GROSS PROFIT 18,300 4,158 22,458 27,684
Distribution costs (3,842) (626) (4,468) (4,388)
Administrative
expenses (37,439) (2,669) (40,108) (16,989)
-------- ------- -------- -------
OPERATING (LOSS)/PROFIT 2 (22,981) 863 (22,118) 6,307
-------- ------- -------- -------
Share of operating loss in joint venture (3,953) (1,874)
Interest receivable and similar income 49 30
Interest payable and similar charges (1,306) (806)
-------- ------
(LOSS)/PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION (27,328) 3,657
Tax on (loss)/profit on ordinary activities 377 (1,506)
-------- -------
(LOSS)/PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION (26,951) 2,151
Minority interests - equity 26 (25)
------- -------
(LOSS)/PROFIT FOR THE FINANCIAL YEAR
ATTRIBUTABLE TO MEMBERS OF THE
PARENT COMPANY (26,925) 2,126
Dividends - (1,223)
------- -------
(LOSS)/PROFIT RETAINED FOR THE
FINANCIAL YEAR (26,925) 903
------- -------
(Loss)/Earnings per share- basic 3 (70.0p) 6.46p
- diluted 3 (70.0p) 6.34p
------- ------
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 March 2001
2001 2000
#000 #000
(Loss)/profit for the financial year excluding share of loss (22,850) 4,101
of joint venture
Share of joint venture's loss for the year (4,075) (1,975)
------ ------
(Loss)/profit for the financial year attributable to members
of the parent company (26,925) 2,126
Exchange gain/(loss) on translation of subsidiaries 146 (225)
Revaluation of fixed assets 325 -
------ -----
TOTAL RECOGNISED GAINS AND LOSSES RELATING TO THE YEAR (26,454) 1,901
------ ------
GROUP BALANCE SHEET
for the year ended 31 March 2001
2001 2000
Notes #000 #000
FIXED ASSETS
Intangible assets 9,769 925
Tangible assets 8,985 5,644
Investments 43 -
------ ------
18,797 6,569
------ ------
CURRENT ASSETS
Stocks 11,731 14,860
Debtors 42,529 35,168
Cash at bank and in hand 4,812 1,427
------ ------
59,072 51,455
CREDITORS: amounts falling due within one year (50,864) (32,566)
------ ------
NET CURRENT ASSETS 8,208 18,889
------ ------
TOTAL ASSETS LESS CURRENT LIABILITIES 27,005 25,458
CREDITORS: amounts falling due after more than one year (3,639) (816)
PROVISION FOR LIABILITIES AND CHARGES
Deferred taxation - (105)
Investment in joint venture:
Share of gross assets 5,842 2,889
Share of gross liabilities (13,178) (6,150)
------ ------
(7,336) (3,261)
------ ------
16,030 21,276
MINORITY INTERESTS - equity 24 -
------ ------
16,054 21,276
------ ------
CAPITAL AND RESERVES
Called up share capital 1,962 1,686
Share premium 33,521 13,994
Revaluation reserve 325 -
Profit and loss account (19,754) 5,596
------ ------
Equity shareholders' funds 16,054 21,276
------ ------
GROUP STATEMENT OF CASHFLOWS
for the year ended 31 March 2001
2001 2000
Notes #000 #000
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES 5 (835) 1,796
------ ------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 49 30
Interest paid (1,115) (628)
Finance lease interest paid (74) (31)
------ ------
(1,140) (629)
------ ------
TAXATION
Corporation tax paid (899) (761)
Overseas tax paid (210) (682)
------ ------
(1,109) (1,443)
------ ------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments for tangible fixed assets (4,687) (3,111)
Payments to acquire investments (578) -
Loans to joint venture (4,750) (500)
Receipts from disposals of tangible fixed assets 670 97
------ ------
(9,345) (3,514)
------ ------
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertakings (14,398) (1,198)
Net overdraft acquired with subsidiary (565) -
Purchase of shares in joint venture - (500)
------ ------
(14,963) (1,698)
------ ------
EQUITY DIVIDENDS PAID (895) (1,016)
------ ------
NET CASH OUTFLOW BEFORE FINANCING (28,287) (6,504)
FINANCING
Issue of ordinary share capital 20,817 2,664
Share issue costs (1,031) (49)
New bank loan 5,013 1,250
Loan repayments (1,320) (208)
Capital element of hire purchase and finance lease
payments 6 (1,145) (291)
------ ------
NET CASH INFLOW FROM FINANCING 22,334 3,366
------ ------
(DECREASE) IN CASH IN THE YEAR 6 (5,953) (3,138)
------ ------
NOTES TO ACCOUNTS
at 31 March 2001
1. TURNOVER AND SEGMENTAL ANALYSIS
Turnover represents the amounts derived from the provision of goods and
services which fall within the Group's ordinary activities, stated net of
value added tax.
The Group operates in two principal areas of activity as set out in the
tables below. It also operates worldwide, but it can be split into three
geographical areas, UK, Europe, and Rest of the World.
Turnover, Group profit on ordinary activities before taxation and net assets
are analysed as follows:
Geographical area
GROUP TURNOVER
Less joint Less joint
Total venture Group Total venture Group
2001 2001 2001 2000 2000 2000
#000 #000 #00 #000 #000 #000
Turnover by destination:
United
Kingdom 200,602 (2,854) 197,748 98,344 (2,806) 95,538
Europe 53,239 - 53,239 115,566 - 115,566
Rest of the World 62,740 (2,723) 60,017 20,003 (1,380) 18,623
------- ------- ------- ------- ------- -------
316,581 (5,577) 311,004 233,913 (4,186) 229,727
------- ------- ------- ------- ------- -------
Turnover by origin:
United
Kingdom 252,366 (2,854) 249,512 179,199 (2,806) 176,393
Europe 57,794 - 57,794 51,583 - 51,583
Rest of the World 6,421 (2,723) 3,698 3,131 (1,380) 1,751
------- ------- ------- ------- ------- -------
316,581 (5,577) 311,004 233,913 (4,186) 229,727
------- ------- ------- ------- ------- -------
NOTES TO ACCOUNTS
at 31 March 2001
PROFIT
2001 2000
#000 #000
Group operating (loss)/profit:
United Kingdom (22,723) 3,002
Europe 1,712 3,203
Rest of the World (1,107) 102
------ -----
(22,118) 6,307
Share of operating loss of joint venture (3,953) (1,874)
Net interest (1,257) (776)
------ ------
(Loss)/profit on ordinary activities before taxation (27,328) 3,657
------ ------
NOTES TO ACCOUNTS
at 31 March 2001
1. TURNOVER AND SEGMENTAL ANALYSIS (continued)
Banner Telecom Group plc's turnover all of which originated in the United
Kingdom was, by destination, #20,104,000 to the UK, #18,030,000 to Europe and
#27,044,000 to the Rest of the World. Banner Telecom Group plc contributed a
profit after tax of #462,000 to the Group's loss after tax.
NET ASSETS 2001 2000
#000 #000
Net assets/(liabilities):
United Kingdom 20,709 22,009
Europe 3,905 2,740
Rest of the World (1,248) (212)
------ ------
23,366 24,537
Share of net liabilities of joint venture (7,336) (3,261)
Minority interest 24 -
------ ------
Total net assets 16,054 21,276
------ ------
Banner Telecom Group plc has net assets of #5,363,000 all of which are in the
United Kingdom.
Area of activity
GROUP TURNOVER 2001 2000
#000 #000
Handset and related sales 286,055 217,474
Accessories and servicing 24,949 12,253
------- -------
311,004 229,727
------- -------
PROFIT
2001 2000
#000 #000
Handset and related sales (14,615) 5,581
Accessories and servicing (7,503) 726
------ ------
Group operating (loss)/profit (22,118) 6,307
Share of operating loss of joint venture (3,953) (1,874)
Net interest (1,257) (776)
------- ------
(Loss)/profit on ordinary activities before
taxation (27,328) 3,657
------ ------
NOTES TO ACCOUNTS
at 31 March 2001
Banner Telecom Group plc's turnover is #62,642,000 for handsets and related
sales and #2,536,000 for accessories and servicing. Banner Telecom Group plc
contribution to group operating loss was a profit of #833,000 for handsets
and related sales and a profit of #30,000 for accessories and servicing.
NOTES TO ACCOUNTS
at 31 March 2001
1. TURNOVER AND SEGMENTAL ANALYSIS (continued)
NET ASSETS 2001 2000
#000 #000
Handset and related sales 28,519 23,974
Accessories and servicing (5,153) 563
------ ------
23,366 24,537
Share of net liabilities of joint venture (7,336) (3,261)
Minority interest 24 -
------ ------
Total net assets 16,054 21,276
------ ------
At 31 March 2001, Banner Telecoms Group plc has net assets of #5,363,000 all
of which are for use in the handset and related sales sector.
Segmental analysis of joint venture
United Kingdom Rest of the World Total
2001 2000 2001 2000 2001 2000
#000 #000 #000 #000 #000 #000
Turnover by origin
and destination 2,854 2,833 2,723 1,353 5,577 4,186
----- ----- ----- ----- ----- -----
Loss before tax (3,192) (1,223) (761) (651) (3,953) (1,874)
----- ----- ----- ----- ----- -----
Net liabilities (5,457) (2,923) (1,879) (338) (7,336) (3,261)
----- ----- ----- ----- ----- -----
The Group's joint venture operates one business segment, that of the sale and
distribution of vehicle telematic products and services.
NOTES TO ACCOUNTS
at 31 March 2001
2. OPERATING (LOSS)/PROFIT
This is stated after charging:
2001 2000
#000 #000
Depreciation of tangible fixed assets
- owned 2,058 1,051
- held under finance leases and hire purchase
contracts 862 229
Auditors' remuneration
- audit services 211 89
- non-audit services 442 103
Amortisation of goodwill 540 37
Impairment of shares held in employee share trust 457 -
Impairment of goodwill 1,884 -
Impairment of other investments 78 -
Impairment of fixed assets 1,325 -
Other operating lease rentals 1,396 618
Loss on disposal of tangible fixed assets 484 5
Foreign exchange losses 241 586
------ ------
3. EARNINGS PER ORDINARY SHARE
Earnings per ordinary share has been calculated on the losses on ordinary
activities after taxation and minority interests of #26,925,000 (2000: profit
#2,126,000) divided by the weighted average number of shares of 38,457,506
(2000: 32,940,938) in issue during the year.
Where there is a loss per share there are no dilutive effects of share
options. In 2000, the diluted earnings per share was based on the profit for
the year #2,126,000 and on 33,559,709 ordinary shares.
4. BORROWINGS
Group Company
2001 2000 2001 2000
#000 #000 #000 #000
Within one year:
Loans 2,111 417 2,111 417
Bank overdrafts 18,972 9,634 16,884 8,548
Finance leases 1,184 301 313 279
In two to five years:
Loans 2,624 625 2,611 625
Finance leases 1,015 191 25 131
------ ------ ------ ------
25,906 11,168 21,944 10,000
------ ------ ------ ------
NOTES TO ACCOUNTS
at 31 March 2001
5. NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES
2001 2000
#000 #000
Operating (loss)/profit (22,118) 6,307
Depreciation and impairment of tangible assets 4,244 1,280
Amortisation and impairment of goodwill 2,424 37
Impairment of investments 535 -
Loss on disposal of tangible assets 484 5
Decrease/(increase) in stocks 6,249 (6,339)
Decrease/(increase) in debtors 5,630 (5,209)
Increase in creditors 1,717 5,715
------ ------
Net cash (outflow)/inflow from operating activities (835) 1,796
------ ------
6. ANALYSIS OF CHANGES IN NET DEBT
Analysis of net debt: Acquisition
At (excluding Other At
1 April Cash cash and non-cash 31 March
2000 flow overdraft) changes 2001
#000 #000 #000 #000 #000
Cash at bank and in hand 1,427 3,385 - - 4,812
Bank overdrafts (9,634) (9,338) - - (18,972)
------ ------ ------ ------ -------
(8,207) (5,953) - - (14,160)
------ ------ ------ ------ -------
Finance leases (492) 1,145 (108) (2,744) (2,199)
Bank loan (1,042) (3,693) - - (4,735)
------ ------ ------ ------ ------
(1,534) (2,548) (108) (2,744) (6,934)
------ ------ ------ ------ ------
Net debt (9,741) (8,501) (108) (2,744) (21,094)
------ ------ ------ ------ ------
The other non-cash changes relate to the inception of new finance leases.
NOTES TO ACCOUNTS
at 31 March 2001
Reconciliation of net cash flow to movement in net debt:
2001 2000
#000 #000
(Decrease) in cash in the year (5,953) (3,138)
Cash (inflow) from (increase) in debt (2,548) (751)
------- -------
Change in net debt resulting from cash flow (8,501) (3,889)
Inception of new finance leases (2,744) (417)
Finance lease acquired with subsidiary (108) -
-------- -------
(Increase) in net debt in the year (11,353) (4,306)
-------- -------
NOTES TO ACCOUNTS
at 31 March 2001
7. POST BALANCE SHEET EVENT
On 28 June 2001 the Group announced it had entered into a conditional
agreement to dispose of its interest in ET Voice Limited in exchange for an
interest in Domain Dynamics Limited and deferred cash consideration. The
conditions were satisfied on 10 July and the Group now holds a 6.4% interest
in Domain Dynamics Limited and deferred cash consideration amounting to 4% of
the net revenues of Domain Dynamics. The cash consideration is payable on a
quarterly basis up to a maximum of #1.6m.
On 28 September 2001 the company sold its investment in Domain Dynamics for
#560,000.
This is receivable as follows:
(i) #480,000 on 31 October 2001 for the disposal of the rights to the
potential deferred cash consideration arising from the acquisition of the
holding in Domain Dynamics Limited
(ii) #80,000 for the sale of the 6.4% interest in Domain Dynamics Limited
through a put and call option exercisable between 31 October 2001 and 31
December 2001.
On 27 July 2001 the Group announced it had agreed to sell its entire 50%
interest in Global Telematics plc (GT) to its joint venture partner, Thales
IT & S Holdings Ltd (Thales), with completion occurring on 31 August 2001.
Initial consideration for the disposal amounts to the repayment of all
trading balances. On 2 July 2001, the Group received #2.4m being the
repayment of all outstanding trade receivables owing to the Group at 31 March
2001. On 31 August 2001 the Group received #6m in respect of its total
investment and loans in the joint venture. As a result of this transaction,
the Group will eliminate its share of net liabilities in the joint venture
and realise a profit of approximately #7.3m. In addition, should Thales
realise any of its investment through a sale or floatation within three years
following completion, the Group will receive additional consideration of
either 22.5% (if the realisation occurs within the first two years), or 10%
(if realisation occurs in the third year), of any net gain achieved by Thales
over the total cost of its investment.
On 28 September 2001 the company sold 81% of its interest in ET Sarl for
12,150,000 French Francs. On the same day for 1,500,000 French Francs the
Company acquired 50% of a joint venture company in France, set up to supply
logistics services to ET Sarl and third parties. The joint venture partner in
is the purchaser of the 81% of ET Sarl.
On 28 September 2001 the company announced that it had secured financing in
the form of a convertible bridging loan from its chairman and principal
shareholder, to bridge a cash shortfall in the period prior to the receipt of
funds from a placing and open offer announced on the same day. On the same
day the placing and open offer document was issued to shareholders, seeking
to raise additional share capital of #2.6m. The placing and open offer was
fully underwritten and Warren Hardy will, subject to approval at an
extraordinary meeting, contribute to this fund raising in the amount of #1.5m
from the conversion of his bridging loan and #0.07m in the form of shares
issued in respect of fund raising costs. An extraordinary general meeting
(the EGM) will be held to approve the Placing and Open Offer and related
resolutions on 24 October 2001.
NOTES TO ACCOUNTS
at 31 March 2001
8. RELATED PARTIES
During the year the parent company and its subsidiaries sold goods to the
value of #2,092,000 (2000: #265,000) and made purchases of #80,000 (2000:
#98,000) in arms' length transactions with Global Telematics plc. This is the
joint venture company of which the parent company holds 50% of its ordinary
shares and of which Edward Belgeonne, a Director of European Telecom PLC
until 31 March 2001, is Managing Director. At 31 March 2001, Global
Telematics plc owed European Telecom PLC #2,448,000 (2000: #246,000) in
respect of these transactions. In addition, Global Telematics plc owed
European Telecom PLC an amount of #6,000,000 (2000: #1,250,000) under the
terms of a loan repayable within one year which is not interest bearing.
Definitions
The following definitions apply unless the context requires otherwise:
"Act" or "Companies Act" The Companies Act 1985, as amended
"Admission" admission of the Placing and Open
Offer Shares to trading on AIM
becoming effective in accordance
with the AIM Rules
"AIM" the Alternative Investment Market
of the London Stock Exchange
"Aim Rules" The rules for AIM Companies and
their nominated advisers published
by the London Stock Exchange
"Banner Telecom" Banner Telecom Group plc
"Banner Telecom Group" Banner Telecom and its subsidiary
undertakings
"Capital Reorganisation" the sub-division and conversion of
each issued Existing Ordinary Share
into one New Ordinary Share and one
Deferred Share and the sub-division
of each unissued Existing Ordinary
Share into five New Ordinary Shares
"City Code" The City Code on Takeovers and
Mergers
"Convertible Bridging Loan" the loan provided to the Company by
Mr Warren Hardy on 28 September 2001
"CREST" the United Kingdom paperless share
settlement system of which CRESTCo
Limited is operator (as such term
is defined in the Uncertificated
Securities Regulations 1995)
"Deferred Shares" the deferred shares of 4 pence
nominal value each in the capital
of the Company resulting from the
Capital Reorganisation
"Domain Dynamics" Domain Dynamics (Holdings) Limited
"Eazypay" Eazypay (Automated Pre-Pay Systems)
plc
"ET Voice" ET Voice Limited
"European Telecom " or "Company" European Telecom plc
"Existing Ordinary Shares" the existing ordinary shares of 5
pence each in the capital of the
Company
"Extraordinary General Meeting" or the Extraordinary General Meeting
"EGM" of the Company (and any adjournment
thereof) convened for 9.30 a.m. on
24 October 2001, notice of which is
set out at the end of this document
"Global Telematics" Global Telematics plc
"Group" European Telecom and its subsidiary
and associated undertakings
"Issue Price" 3 pence per Placing and Open Offer
Share
"London Stock Exchange" London Stock Exchange plc
"New Ordinary Shares" the ordinary shares of 1 pence each
in the capital of the Company,
being the ordinary shares of the
Company following the Capital
Reorganisation
"Official List" the Official List of the UK Listing
Authority
"Open Offer" the conditional invitation being
made by KPMG Corporate Finance, on
behalf of the Company, to
Qualifying Shareholders to
subscribe for the Open Offer Shares
on the terms and subject to the
conditions set out in this document
and in the Application Form
"Open Offer Shares" 16,822,450 New Ordinary Shares the
subject of the Open Offer
"Panel" the Panel on Takeovers and Mergers
"Placing" the placing of the 70,010,883 New
Ordinary Share pursuant to the
terms of the Placing Agreement
"Placing Agreement" the agreement, dated 28 September
2001, between the Company, KPMG
Corporate Finance, Mr Warren Hardy
and Mr Michael Moors relating to
the Placing and the Open Offer
"Placing and Open Offer Shares" 86,833,333 New Ordinary Shares to
be issued by the Company pursuant
to the Placing and Open Offer
"Qualifying Shareholders" all Shareholders on the register of
members of European Telecom on the
Record Date other than certain
overseas Shareholders
"Record Date" the close of business on 25
September 2001
"Related Party" a related party of the Company
pursuant to rule 12 of the AIM Rules
"Resolutions" the resolutions to be proposed at
the EGM, as set out in the notice
of EGM at the end of this document
"Rule 9" Rule 9 of the City Code
"Shareholder" or "Shareholders" holders of Existing Ordinary Shares
"TAG" The Accessory Group Limited
"Twinchoice" Twinchoice Limited
"UK" or "United Kingdom" the United Kingdom of Great Britain
and Northern Ireland recorded in
the relevant register of the share
concerned as being held in
uncertificated form in CREST and
title to which by virtue of the
Uncertificated Securities
Regulations 1995 (SI 1995 No
95/3272) may be transferred by
means of CREST
"US", "USA" or "United States" the United States of America, its
territories and possessions, any
state of the United States of
America and the District of Colombia
Terms defined in the CREST manual shall, unless the context otherwise
requires, bear the same meanings when used herein.
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